China SM ADD probe to delay 2018 import contract negotiations

SINGAPORE (ICIS)–China’s ongoing anti-dumping investigation on styrene monomer (SM) imports from South Korea, Taiwan and the US may delay term negotiations for 2018, industry sources said.

Market talks are rife that provisional antidumping duties (ADDs) from a low of 2% to as much as 50% may be imposed depending on producer and country of origin, as early as February 2018.

The probe was launched in June to the surprise of most market players since China is a major importer of the chemical, with the bulk sourced from South Korea. The investigation will last a year, with a possible six-month extension.

China’s Ministry of Commerce is expected to make a preliminary decision on the ADD probe in February next year, with a final determination to be made once the one-year investigation is completed.

SM term import contract discussions typically start in December, but most market players are not inclined to go to the negotiating table until the final results of the investigation are out.

Importers are also currently unwilling to purchase November-loading US cargoes, and were preferring to buy domestic products or Asian cargoes to cover their supply gap.

Some traders, however, remained convinced that China will not impose ADDs on SM imports.

In a survey conducted by ICIS in July, about a month after the ADD probe commenced, less than a fifth of industry respondents expected the import barrier to be put in place. But the market view has changed since then.

At the recent styrene industry meeting at Nanning in China’s Guangxi province (18-20 October), market players raised concerns that the resulting uncertainties amid the ADD probe will likely delay negotiations for 2018 SM import contracts.

China is a net importer of SM, with total annual demand at nearly 10m tonnes, of which 3m-4m tonnes are covered by imports.

In January to September 2017, the country’s SM imports totalled 2.31m tonnes, a combined 51% of which were sourced from South Korea, the US and Taiwan.

For the whole of last year, the three countries’ combined share to China’s 3.5m-tonne SM imports stood at 60%.

Source: China Customs data

Source: China Customs

The ADD probe on SM imports has not had much impact on China’s domestic market since its announcement in June, with prices largely moving in tune with market fundamentals, industry sources said.

SM is a liquid chemical used for make resins such as polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers such as styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).

Source: China editorial team at ICIS

Focus article by Tina Zhang

Picture: A cardboard box with styrofoam peanuts. (Photographer: Hans Lippert/imageBROKER/REX/Shutterstock